UK shrugs off Brexit blues while Europe continues to fret

Today’s industrial sentiment survey for August will help to ease concerns that the UK may be sliding toward a fresh, post-Brexit economic downturn, as the official reading of 53.3 is the highest since October 2015. The purchasing managers’ index (PMI) for manufacturing has rebounded from the July reading of 48.3, which had represented its lowest level since April 2013.

“Today’s improved score follows on from this week’s UK consumer confidence survey from GfK, which also suggested that the initial psychological shock caused by the EU referendum vote on 23 June had begun to wear off." says Russ Mould, AJ Bell Investment Director. (see chart 1 below)

“Attention will now switch to the construction PMI on Friday and Monday’s services survey, to see if they also bounce back above the key 50 mark.

“The Government and Bank of England alike will be relieved to see the improved scores and intrigued to see that European sentiment appears to have taken a bigger hit than it has on this side of the channel.

“Today’s equivalent manufacturing surveys in the Eurozone left the French manufacturing PMI at a two-month low and Germany at a three month low while Italy provided its worst score since early 2014 as it dipped to 49.8.

“Meanwhile, the Courbe Synthétique last week slipped lower to potentially end a string of month-on-month gains in the National Bank of Belgium’s industrial confidence indicator.” (see chart 2 below)

Chart 1

Source: CIPS/Markit, Gfk, Thomson Reuters Datastream
NOTE: Past performance is not a guide to future performance and some investments need to be held for the long term.

Chart 2

Source: National Bank of Belgium
NOTE: Past performance is not a guide to future performance and some investments need to be held for the long term.

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